SALT LAKE CITY — Apart from persistent health problems, another long-term side effect of COVID-19 might be bankruptcy.
Shane Stewart, who is a certified financial planner with Deseret Mutual Benefit Association, joins Dave Noriega and Debbie Dujanovic to discuss the ramifications of bankruptcy during COVID-19.
COVID-19 has taken jobs from many people around the globe, especially in the hospitality and travel industries, and with it, the employees’ medical insurance.
Stewart said the most common type of bankruptcy relief helps a debtor restructure their debt based on the individual’s current income.
“That takes some time, that’s a real hardship. Count on a lifestyle change — at least temporarily — while you work those things out,” Stewart said. “The best way to go into bankruptcy is to lay it on the table and say, ‘This is what I have. How can I can I get some help?'”
All debts forgiven? Rare
“I think there may be this misconception out there that if you declare bankruptcy, your debts are forgiven or you don’t have to pay for them. What does bankruptcy mean for your debts?” Dave asked.
“Most of the time, it’s a restructure. You still owe things. You’re just figuring out ways to pay that,” Stewart said.
He added that there is a way to have all debts forgiven, but he said it will haunt the debtor for the rest of their lives. He said if creditors are owed a debt, they don’t want to just write it off.
A person or business being forgiven of all debt is very rare, he said.
Stewart recommends restructuring debt to make the bankruptcy temporary.
Debbie advised debtors of medical bills to call their doctor or hospital and try to negotiate some type of financial relief.
“I actually had a friend do this in front of me once. The medical bill was reduced in half. It went from like $1,000 to about $400. They just said, ‘Pay it on the spot. We’re done. And we’ll call it good.’ One phone call,” she said.
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